Friday, February 21, 2014

Coming to a Health Care Plan Near You... HDHSA, or High Deductible Health Savings Account.

What is behind the rise in these plans?

-although they have been around for a decade, the recent increase in the availability of these plans is due to the Affordable Care Act.  Why?  Because it can save employers money.  That's the bottom line.

So why do employers suddenly need to save money on health plans?

-the affordable care act makes insurance plans more expensive in general.  If you haven't been following the reasons behind this, please start hereIn short, plans now have to cover all kinds of wellness benefits, maternity care (whether you are male or female), etc.  They also cannot deny insurance for pre-existing conditions and there is no lifetime limit on payouts from the insurance company.  So the insurance companies are charging more in order to stay in business.  Hence, companies (and employees) get to pay more for their plans.

 Does an HDHSA plan save an employer money?

-yes.  It basically shifts more of the cost to the employee.   
 Does an HDHSA save YOU money?

-maybeIdeally, an HDHSA plan comes with a lower monthly premium.  Some companies even contribute the the health savings account, which can be a big benefit.

-basically, these plans have a very high deductible, at least $1,250 per year for individuals and $2,500 per year for families, but usually double or triple that for most employer plans.  This deductible has to be met before the insurance company starts paying out.  BUT, even after you reach the deductible for the year, the insurance only pays 70-80% depending on the plan.  The portion that you pay goes up until you reach your yearly out-of-pocket maximum which can run around $12,000 for a family.  

-So let's stop here for a moment... at this point, you are still paying a monthly premium in order to have the "privilege" of paying out of pocket until you reach your deductible.  This is where the Health Savings Account can come into play: perhaps you use some of the money you would have spent on higher monthly premiums for a traditional health plan with a lower deductible and put that into the savings account instead?

-while this sounds good in theory...who are the people that have the extra money to put into the HSA?  The same ones who couldn't afford insurance before?  The same people living paycheck to paycheck in the current sluggish economy?  

-so if you were well off financially already or have some savings to begin with, then you might benefit from the HSA idea.  You can put up to $6,550 as a family into the HSA tax-free, and even earn interest.  If you don't have to use all of this money during the year, then it rolls over to the next year and keeps growing.  This is great, if you can do it.  

-it seems to me that if you can get through at least one year without using too much of your HSA, then you will have enough buffer to be part of a high-deductible plan.  If, however, you have a baby or some kind of surgery, you can likely kiss that savings goodbye for the year.  

-so it is a gamble.  There is not a good answer.  Each person will have to decide what may work best.  If your company will contribute to the HSA, then you might want to take the deal.  

-but a cautionary note... the HSA's are not "front-loaded" like Flexible Savings accountsIn other words, you only have as much available in the HSA as you have paid in from your payroll deduction.  So if you have to be hospitalized in January during your first year of an HSA plan, you will not have anything in the HSA account and will have to pay for it all out of pocket or do some fancy negotiating.

Why haven't all companies started offering these plans yet?  

-fun fact: President Obama has delayed parts of the ACA 28 times by some counts.  Many companies started changing their plans this year to get a jump on the situation.  Others are waiting until November 2014 before rolling out their new plans.  Some companies with more than 50 employees, but fewer than 100 employees just got another reprieve from President Obama and will not have to comply until 2015.    

How might this affect our clients who use private pay or insurance reimbursement for music therapy services? 

-good question! Many of the experts say that high deductible plans exert downward pressure on the overall cost of health care as consumers become more careful with there flexible dollars.  My question is: will this negatively affect willingness to spend money on alternative therapy?  Depending on a family's circumstance, they might never reach their deductible while paying for music therapy and will have to pay for it completely out of pocket or with HSA dollars if music therapy is recognized as an approved provider.

-how is massage therapy an approved expense for HSA accounts?  I have nothing against massage therapy!  But music therapy is not listed as an approved provider.  I think this will give us a clue, however, about how to get payments authorized from an HSA.  As with physical therapy services, massage therapy:

" qualified when authorized by a physician confirming that massage therapy is prescribed as treatment of a specific medical condition. The physician should also include the frequency and duration of the therapy."   

Will you share with us your experience using an HSA?

Do you have any stories about how the changes in the health care laws are affecting your client's access to music therapy services?

I hope you will share.  

Thanks for reading today!     


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